NZ business comfortable with outsourcing compared to abroad

While many overseas companies
are hesitant to outsource work, the majority of New Zealand
businesses are happy to embrace the concept, according to
new research from the Grant Thornton International Business
Report (IBR).

Even though overseas businesses are aware of
the cost savings and process efficiencies outsourcing
business processes can provide, many are worried about
losing control of a key process.

Paul Kane, Partner,
Privately Held Business at Grant Thornton New Zealand, said
that while the IBR survey suggests that 60% of businesses
around the world don’t outsource or have any immediate
plans to outsource a business process, many New Zealand
businesses feel differently.

“In New Zealand, over half
of our businesses (52%) either outsource or plan to
outsource work, ranking us 9th out of the 45 economies
surveyed.

“A key ingredient in this figure is the size
of our businesses. We are predominantly a country of small
to medium sized businesses and for many it’s just too
expensive or totally impractical to try and carry out all
business activities inside the company.

“While this does
give away an element of control, and there is a section of
New Zealand business that is reluctant to outsource for this
very reason, it does mean that businesses can tap into
expertise on an ‘as needs’ basis. It means you can get
top quality advice which is not a fixed overhead,” he
said.

“We may just see this as logical, but the same
can’t be said for the rest of the world.Overseas there is
a popular misconception that outsourcing a process means a
business loses control, whereas in fact, outsourcing can
actually help senior leaders at dynamic companies take a
step back and gain a clearer picture of how the business is
performing against its strategy.

“Outsourcing can both
improve efficiencies, as well as reduce cost and we have
noticed that in the last six months there has been quite a
shift to outsourcing amongst middle-sized companies in New
Zealand where they have taken out the in-house accounting
section and replaced it with external managers under our
control.

“It can result in us putting in our staff, or
mean that we employ and control their staff. The onus is
then on us to control and perform in an area that we
understand. There are some businesses who do not understand
what their accounting section is both meant to do and
actually capable of doing,” he said.

Kane
said that one aspect of the report that was interesting was
the reluctance of overseas firms to have their business
processes carried out in another country.

“Unfortunately
we have no data on how New Zealand firms feel on having the
likes of their accounting work carried out in specific
places, such as India.

“My gut feeling is that we would
be far more open about this than other overseas companies.
There are accounting firms in New Zealand and the United
States’ where much of the accounting work is actually
carried out in India,” he said.

The
Grant Thornton International Business Report (IBR) provides
insight into the views and expectations of more than 12,500
businesses per year across 45 economies. This unique survey
draws upon 22 years of trend data for most European
participants and 10 years for many non-European economies.
For more information, please visit: www.internationalbusinessreport.com

Data
collectionData collection is managed by Grant
Thornton's core research partner – Experian.
Questionnaires are translated into local languages with each
participating country having the option to ask a small
number of country specific questions in addition to the core
questionnaire. Fieldwork is undertaken on a quarterly basis.
The research is carried out primarily by
telephone.

SampleIBR is a survey of both listed
and privately held businesses. The data for this release are
drawn from interviews with more than 3,300 chief executive
officers, managing directors, chairmen or other senior
executives from all industry sectors conducted in September
2013.

Prime Minister John Key says it is “not the government’s preferred option” to make a fresh capital injection into the troubled state-owned coal miner, Solid Energy, but dodged journalists’ questions at his weekly press conference on whether that might prove necessary... More>>

NZCU Baywide says that once it was found to have committed a breach of a former staff member’s privacy, it had attempted to resolve the matter... the censure and remedies for its actions taken almost three years ago are “severe” but accepted, and will hopefully draw a line under the matter. More>>

PayPal has ceased processing payments for Mega, the file storage and encryption firm looking to join the New Zealand stock market via a reverse listing of TRS Investments, amid claims it is not a legitimate cloud storage service. More>>

The New Zealand government's operating deficit was smaller than expected in the first six months of the financial year, as the consumption and corporate tax take rose ahead of forecast in December, having lagged estimates in previous months. More>>